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Monday, February 20, 2006

Why Wait Until 2007 to Upgrade the CAFE Standards?

Today, the Prez is gallivanting about on the taxpayer dime speechifying on issues such as this:

Some of the nations we rely on for oil have unstable governments, or fundamental differences with the United States. These countries know we need their oil and that reduces influence. It creates a national security issue when we're held hostage for energy by foreign nations that may not like us.

Energy is also part of our economic security, as well. That's obvious. I mean, the global demand for oil has been rising faster than supply because there's new economies that are beginning to gin up, new economies growing, like China and India. Oil prices rise sharply when demand is greater than supply. And when they do, it strains your budgets. It hurts our families, it hurts our small entrepreneurs. It's like a hidden tax. And so we're vulnerable to high prices of oil, and we're vulnerable to sudden disruptions of oil. What I'm telling you is oil -- the dependence upon oil is a national security problem, and an economic security problem. And here's what we intend to do about it.

If that is so - which he actually does have a point, a legit question would be when are we going to adjust and leverage the Cafe Standards to fix this problem?

Q Some of the critics say, though, that what you're proposing is all incentives, and that maybe you need to do some things like tighten up regulations and change the CAFE standards, and things like that. Why not pursue that approach, as well?

MR. HUBBARD: Well, as you know, we've recommended -- and there's going to be a CAFE increase for light trucks and -- and SUVs, right. That begins in 2007, and we proposed increasing it further after 2007. We don't control the -- we don't control the CAFE standards for automobiles. But we believe what's most important is -- well, number one is the high cost of fuel is encouraging people to buy more fuel efficient vehicles. And secondly, what's most important is that we invest in technology so that the American people can continue with the lifestyles they currently have, purchasing fuel that is non-polluting and that comes from sources that are independent from unreliable foreign countries.

My question is if we want to get off mid-East oil, why wait until 2007? Is there a special lobbyist who needs to wine and dine some senators before the CAFE standards go up? Is it because this is an election year? Oh, and by the way, can any one interpret what Hubbard was saying in his answer? What does it mean?

However, several important elements of the President’s National Energy Policy remain to be addressed:

ANWR: The President continues to support Congressional action to authorize environmentally responsible oil and gas exploration within a small area of the Arctic National Wildlife Refuge (ANWR) located in northern Alaska. Using modern technologies and subject to the world’s most stringent environmental protections, ANWR could produce as much as 1 million barrels of oil per day to help meet our future energy needs. Opening ANWR will also create tens of thousands of new jobs for American workers.

Refineries: Due to consolidation in the refining industry and increased demand for gasoline and diesel fuels, refineries have operated at more than 90% capacity in recent years. This has strained the existing refinery system, particularly during times of unforeseen disruptions, and led to high and volatile fuel prices. The President has called for new investments in refinery capacity, either through expansions at existing sites, or through construction of new facilities on former military sites. The President has expressed his desire to work with Congress on legislation to help accomplish this, and believes that we should develop a one-year, EPA-led permitting process that can provide expedited decisions while maintaining high environmental standards for review.

New Source Review: The New Source Review (NSR) permitting program creates regulatory uncertainty because it is inflexible, its applicability requirements are confusing, and it can impose high costs due to delays in the permit process. Such discouragement results in lost capacity, as well as lost opportunities to improve energy efficiency and reduce air pollution. As called for by the President’s National Energy Policy, EPA has continued a vigorous program of NSR improvements designed to remove unnecessary regulatory barriers to modernization in the energy sector, thereby helping to address the extreme demands being placed on our Nation’s energy supply infrastructure. However, litigation has slowed the implementation of these rules. These rules should be adopted in legislation, so that private industry is encouraged to invest more quickly in upgrades that will make our energy sector more efficient and productive.

Offshore Oil and Gas: The Outer Continental Shelf (OCS) is a significant source of oil and gas for the Nation’s energy supply, providing more than 25 percent of the country’s natural gas production and more than 30 percent of total domestic oil production. Estimates of oil and gas resources in undiscovered fields on the OCS total 76 billion barrels of oil and 406 trillion cubic feet of gas. The President continues to support existing moratoria on OCS production where states do not wish such activity to occur off their immediate coasts. However, the President also supports increasing OCS production in cooperation with states that support such development.

Alaska Gas Pipeline: The North Slope of Alaska has an estimated 35 trillion cubic feet of natural gas, which is currently stranded due to the lack of a pipeline to transport it to market. At present, nearly all of the natural gas produced during oil production operations at Prudhoe Bay is reinjected and used to increase oil recovery. Approximately 3 billion cubic feet per day (equivalent to about 30% of current Gulf of Mexico production) could be brought to market through an Alaska natural gas pipeline. Although the Alaska Natural Gas Pipeline Act signed by the President in 2004 contained numerous incentives for the industry and the State of Alaska to reach agreement on those items needed to build the pipeline, no agreement has been reached yet. The President continues to encourage all parties to resolve remaining issues as soon as possible, so that stranded gas resources from Alaska can soon be brought to the Lower 48 states.

Clear Skies: To ensure that we meet growing demand for electricity while protecting the environment, the President has called on Congress to enact Clear Skies legislation to cut power plant pollution of sulfur dioxide, nitrogen oxides, and, for the first time, mercury by an unprecedented 70 percent. Clear Skies will significantly expand the Clean Air Act’s most innovative and successful program to further reduce emissions from more than 1300 power plants nationwide by as much as 9 million tons annually. Utilities will achieve these reductions by spending almost $50 billion on cutting-edge pollution abatement technology. Clear Skies will also help promote new investments in cleaner coal technologies.